विशेषज्ञ की सलाह चाहिए?हमारे गुरु मदद कर सकते हैं
Ramalingam Kalirajan |10872 Answers |Ask -Follow
Mutual Funds, Financial Planning Expert - Answered on Jun 16, 2025
Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Jun 16, 2025
Sir, I am a working Professional and planning to take up a job abroad by next month for a long term. I seek your advise on withdrawing my current EPF corpus amount (Rs.18.50 Lakhs) completly and reinvesting the same for better gains. Please suggest various options for growing this savings further considering all the tax implications. I am not willing to go with Real Estate buying.
Ans: Your decision to think ahead and plan wisely is praiseworthy. As a Certified Financial Planner, I appreciate your forward-looking approach. Let us now assess your EPF withdrawal and reinvestment strategy from all sides.
Should You Withdraw EPF Now?
You are taking up a long-term job abroad.
As per EPF rules, you can withdraw the amount if leaving Indian employment permanently.
Since your EPF corpus is Rs.18.50 lakhs, the withdrawal is tax-free if the account is over 5 years old.
If the EPF is less than 5 years old, the entire amount becomes taxable.
Check your EPF start date before finalising the decision.
Is Withdrawing EPF the Right Choice?
Let’s assess the pros and cons:
Pros of Withdrawal:
Full control over your funds.
You can reinvest in more growth-oriented options.
No tracking or managing dormant EPF in India.
Cons of Withdrawal:
EPF gives stable, guaranteed returns.
You may miss the benefit of compounding over long term.
Once withdrawn, rejoining EPF later abroad is not allowed.
Recommendation:
If you are not planning to return to Indian employment, withdrawal is acceptable.
Else, consider leaving it untouched, if not urgent.
Reinvestment Strategy for Rs.18.50 Lakhs Corpus
Since real estate and annuities are not suitable, we will look into suitable financial products.
We will now build a 360-degree plan for this reinvestment:
Understand Your Financial Goals First
Before investing, understand your long-term and short-term needs.
Do you plan to retire in India?
Any plans for children’s education or wedding?
Do you need emergency funds as NRIs don’t get quick credit access?
What is your investment horizon? 5 years? 10 years? 15+ years?
Your answers to these will shape the investment plan.
Taxation for NRIs – Key Point to Keep in Mind
As an NRI, you are taxed only on Indian income.
India has DTAA (Double Taxation Avoidance Agreement) with many countries.
You must invest in NRI-compliant instruments only.
Use NRO/NRE accounts wherever needed.
Ensure TDS deducted in India can be adjusted in the country you reside in.
Mutual Funds: The Best Option for Growth
Mutual funds offer growth, flexibility, and diversification. They work well for NRIs.
But you must follow these steps:
Convert your bank account to NRO/NRE.
Do KYC as NRI and update FATCA details.
Invest through an experienced Certified Financial Planner and not directly.
Let’s look at how to split the corpus into mutual fund types:
Suggested Mutual Fund Allocation Strategy
1. Equity Mutual Funds (for long-term growth):
Suitable if your horizon is 5 years or more.
They can give inflation-beating returns over time.
You must invest via regular plans through a trusted Mutual Fund Distributor (MFD) guided by a Certified Financial Planner.
Important:
Do not invest in direct plans on your own.
Why not direct plans?
No expert advice.
No periodic portfolio review.
Miss out on rebalancing opportunities.
No goal tracking.
Misaligned fund choices.
With regular plan via a Certified Financial Planner:
Portfolio will be regularly reviewed.
Goal-based investments will be designed.
Asset allocation will be optimised.
Risk is managed better.
Behavioural bias is avoided with expert handholding.
2. Hybrid Mutual Funds (for moderate risk and stability):
Good if you want growth with stability.
Mix of equity and debt.
Useful if you may need partial money in 3–5 years.
3. Debt Mutual Funds (for short-term and emergency needs):
Lower risk than equity.
Ideal for NRIs to park money for 1–3 years.
Avoid FDs due to lower post-tax returns.
Funds in this category are taxed as per your income slab.
Remember: For equity mutual funds:
LTCG above Rs.1.25 lakh taxed at 12.5%.
STCG taxed at 20%.
For debt mutual funds:
Taxed as per your income tax slab, both short and long term.
Why Not Index Funds or ETFs?
Though index funds may look low cost, they have major disadvantages:
No flexibility to adjust portfolio during market crashes.
No protection in bear phases.
No chance to outperform market.
Underperform in sideways or volatile markets.
Not suitable for long-term financial planning.
Actively managed funds are better because:
A professional fund manager handles your money.
Can beat index by selecting high-potential stocks.
Adjust the portfolio in various market conditions.
Help reduce downside risk.
In uncertain markets, guidance and dynamic fund management matter more than just low cost.
SIPs vs. Lump Sum Investment
You can do both. Here is how to manage it:
Keep Rs.3–4 lakhs in debt mutual funds as emergency buffer.
Invest Rs.6–7 lakhs in lump sum into suitable hybrid funds.
Put remaining Rs.7–9 lakhs into a STP (Systematic Transfer Plan).
Start SIPs from a liquid fund into equity funds.
This reduces risk of market timing.
This method gives both safety and returns.
Insurance-Cum-Investment Policies: What to Do?
If you hold LICs, ULIPs or other endowment plans, consider this:
These give low returns (often 3–5% CAGR).
Not suitable for wealth building.
Mixing insurance and investment reduces overall benefits.
You must surrender them and reinvest the proceeds in mutual funds.
Do this only if you already hold them.
Take term insurance for protection, not investment.
Gold as an Option?
You can allocate 5–10% in sovereign gold bonds (SGB).
But not as a primary investment option.
Gold is better as portfolio hedge, not wealth creation.
NRIs Must Avoid These Mistakes
Please stay cautious of:
Investing through unregulated agents abroad.
Ignoring Indian tax rules.
Putting all money into low-return FDs.
Chasing short-term returns without a plan.
Not reviewing investments annually.
Emergency Fund and Health Cover Planning
Don’t invest everything. Keep some amount liquid.
At least Rs.3–4 lakhs in debt funds.
NRIs must also review Indian health policies.
If returning to India later, reapplying could become harder.
Currency Risk and Repatriation
Invest in funds where proceeds are easy to repatriate.
Use NRE accounts and tax-efficient strategies.
Equity funds (with growth plan) allow gains to grow without taxation until withdrawn.
A Certified Financial Planner will help you optimise returns and compliance.
Regular Portfolio Review is Must
Every year, review the plan.
Switch between funds if needed.
Book profits if goals are nearing.
Add more funds if your income increases.
Rebalance between equity and debt based on market.
This ensures continued alignment to your goals.
Tax Planning as an NRI
Keep in mind:
Mutual fund capital gains must be declared in Indian ITR.
TDS is auto-deducted for NRIs.
Check if you can offset Indian tax with foreign country tax under DTAA.
Don’t forget to update your residential status in KYC every year.
Finally
Reinvesting EPF wisely is a smart move.
You are already thinking in the right direction.
To summarise:
Withdraw EPF if you are not returning soon.
Avoid real estate, direct plans, and index funds.
Choose mutual funds via regular route under Certified Financial Planner guidance.
Allocate smartly between equity, hybrid, and debt.
Keep an emergency fund and review yearly.
Use NRO/NRE accounts and stay tax-compliant.
This will ensure peace of mind, stability, and growth in long run.
Please take action step-by-step under expert supervision.
You deserve a worry-free financial future.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Should You Withdraw EPF Now?
You are taking up a long-term job abroad.
As per EPF rules, you can withdraw the amount if leaving Indian employment permanently.
Since your EPF corpus is Rs.18.50 lakhs, the withdrawal is tax-free if the account is over 5 years old.
If the EPF is less than 5 years old, the entire amount becomes taxable.
Check your EPF start date before finalising the decision.
Is Withdrawing EPF the Right Choice?
Let’s assess the pros and cons:
Pros of Withdrawal:
Full control over your funds.
You can reinvest in more growth-oriented options.
No tracking or managing dormant EPF in India.
Cons of Withdrawal:
EPF gives stable, guaranteed returns.
You may miss the benefit of compounding over long term.
Once withdrawn, rejoining EPF later abroad is not allowed.
Recommendation:
If you are not planning to return to Indian employment, withdrawal is acceptable.
Else, consider leaving it untouched, if not urgent.
Reinvestment Strategy for Rs.18.50 Lakhs Corpus
Since real estate and annuities are not suitable, we will look into suitable financial products.
We will now build a 360-degree plan for this reinvestment:
Understand Your Financial Goals First
Before investing, understand your long-term and short-term needs.
Do you plan to retire in India?
Any plans for children’s education or wedding?
Do you need emergency funds as NRIs don’t get quick credit access?
What is your investment horizon? 5 years? 10 years? 15+ years?
Your answers to these will shape the investment plan.
Taxation for NRIs – Key Point to Keep in Mind
As an NRI, you are taxed only on Indian income.
India has DTAA (Double Taxation Avoidance Agreement) with many countries.
You must invest in NRI-compliant instruments only.
Use NRO/NRE accounts wherever needed.
Ensure TDS deducted in India can be adjusted in the country you reside in.
Mutual Funds: The Best Option for Growth
Mutual funds offer growth, flexibility, and diversification. They work well for NRIs.
But you must follow these steps:
Convert your bank account to NRO/NRE.
Do KYC as NRI and update FATCA details.
Invest through an experienced Certified Financial Planner and not directly.
Let’s look at how to split the corpus into mutual fund types:
Suggested Mutual Fund Allocation Strategy
1. Equity Mutual Funds (for long-term growth):
Suitable if your horizon is 5 years or more.
They can give inflation-beating returns over time.
You must invest via regular plans through a trusted Mutual Fund Distributor (MFD) guided by a Certified Financial Planner.
Important:
Do not invest in direct plans on your own.
Why not direct plans?
No expert advice.
No periodic portfolio review.
Miss out on rebalancing opportunities.
No goal tracking.
Misaligned fund choices.
With regular plan via a Certified Financial Planner:
Portfolio will be regularly reviewed.
Goal-based investments will be designed.
Asset allocation will be optimised.
Risk is managed better.
Behavioural bias is avoided with expert handholding.
2. Hybrid Mutual Funds (for moderate risk and stability):
Good if you want growth with stability.
Mix of equity and debt.
Useful if you may need partial money in 3–5 years.
3. Debt Mutual Funds (for short-term and emergency needs):
Lower risk than equity.
Ideal for NRIs to park money for 1–3 years.
Avoid FDs due to lower post-tax returns.
Funds in this category are taxed as per your income slab.
Remember: For equity mutual funds:
LTCG above Rs.1.25 lakh taxed at 12.5%.
STCG taxed at 20%.
For debt mutual funds:
Taxed as per your income tax slab, both short and long term.
Why Not Index Funds or ETFs?
Though index funds may look low cost, they have major disadvantages:
No flexibility to adjust portfolio during market crashes.
No protection in bear phases.
No chance to outperform market.
Underperform in sideways or volatile markets.
Not suitable for long-term financial planning.
Actively managed funds are better because:
A professional fund manager handles your money.
Can beat index by selecting high-potential stocks.
Adjust the portfolio in various market conditions.
Help reduce downside risk.
In uncertain markets, guidance and dynamic fund management matter more than just low cost.
SIPs vs. Lump Sum Investment
You can do both. Here is how to manage it:
Keep Rs.3–4 lakhs in debt mutual funds as emergency buffer.
Invest Rs.6–7 lakhs in lump sum into suitable hybrid funds.
Put remaining Rs.7–9 lakhs into a STP (Systematic Transfer Plan).
Start SIPs from a liquid fund into equity funds.
This reduces risk of market timing.
This method gives both safety and returns.
Insurance-Cum-Investment Policies: What to Do?
If you hold LICs, ULIPs or other endowment plans, consider this:
These give low returns (often 3–5% CAGR).
Not suitable for wealth building.
Mixing insurance and investment reduces overall benefits.
You must surrender them and reinvest the proceeds in mutual funds.
Do this only if you already hold them.
Take term insurance for protection, not investment.
Gold as an Option?
You can allocate 5–10% in sovereign gold bonds (SGB).
But not as a primary investment option.
Gold is better as portfolio hedge, not wealth creation.
NRIs Must Avoid These Mistakes
Please stay cautious of:
Investing through unregulated agents abroad.
Ignoring Indian tax rules.
Putting all money into low-return FDs.
Chasing short-term returns without a plan.
Not reviewing investments annually.
Emergency Fund and Health Cover Planning
Don’t invest everything. Keep some amount liquid.
At least Rs.3–4 lakhs in debt funds.
NRIs must also review Indian health policies.
If returning to India later, reapplying could become harder.
Currency Risk and Repatriation
Invest in funds where proceeds are easy to repatriate.
Use NRE accounts and tax-efficient strategies.
Equity funds (with growth plan) allow gains to grow without taxation until withdrawn.
A Certified Financial Planner will help you optimise returns and compliance.
Regular Portfolio Review is Must
Every year, review the plan.
Switch between funds if needed.
Book profits if goals are nearing.
Add more funds if your income increases.
Rebalance between equity and debt based on market.
This ensures continued alignment to your goals.
Tax Planning as an NRI
Keep in mind:
Mutual fund capital gains must be declared in Indian ITR.
TDS is auto-deducted for NRIs.
Check if you can offset Indian tax with foreign country tax under DTAA.
Don’t forget to update your residential status in KYC every year.
Finally
Reinvesting EPF wisely is a smart move.
You are already thinking in the right direction.
To summarise:
Withdraw EPF if you are not returning soon.
Avoid real estate, direct plans, and index funds.
Choose mutual funds via regular route under Certified Financial Planner guidance.
Allocate smartly between equity, hybrid, and debt.
Keep an emergency fund and review yearly.
Use NRO/NRE accounts and stay tax-compliant.
This will ensure peace of mind, stability, and growth in long run.
Please take action step-by-step under expert supervision.
You deserve a worry-free financial future.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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